Hong Kong’s richest man called for higher corporate taxes to help tackle wealth inequality and urged the government to think of ways of countering rising discontent among its younger residents by providing them with more opportunities.
"Tax companies an extra one or two percent, then a lot of the poor would benefit," CK Hutchison Holding Ltd. Chairman Li Ka-shing told Bloomberg Television’s Angie Lau in his first interview with international media since 2012. "The most important thing the government needs to think about are the options made available to young people."
Li, who says the city is going through its toughest times in two decades, is weighing in on the global income-inequality debate that’s prompted the likes of Warren Buffett and Bill Gates to call for higher taxes for the rich. While low taxation has helped put Hong Kong atop the IMD business school’s list of most competitive places to do business in the world, one-in-seven residents there live in a household earning less than $2,100 a month.
The wealth gap in Hong Kong -- with the holdings of the 10 richest billionaires exceeding one-third of annual economic output -- has been blamed for feeding unrest including pro-democracy protests that paralyzed the city in 2014 and a February riot that injured scores of police officers. That’s drawn the attention of China’s central government, which has ordered leaders in the former British colony to put aside political debates and focus on improving livelihoods.
"The most important thing the government needs to think about is the options made available to the young people," Li said. "Especially for the young people, you have to give them opportunities and hope."
As to levies, Hong Kong has among the lowest corporate-tax rates in the world by capping them at 16.5 percent, compared with 40 percent in the U.S. and an average 23.6 percent globally, according to accounting and advisory firm KPMG.
Unlike Buffett and Gates, Li opposed the idea charging higher tax rates for the rich. "You mustn’t tax some people more and some people less or else it’s chaos," he said.
In the Thursday interview, Li singled out education and health care as areas that could benefit from additional funding. The city’s government plans to spend about a third of its HK$487 billion ($63 billion) budget on those two fields this fiscal year.
The office of the Financial Secretary in Hong Kong said in an e-mailed statement that a simple, low-tax system was "the bedrock of Hong Kong’s success." The city has posted budget surpluses for a dozen consecutive years, it said. Still, the government said it intended to keep an open mind and wouldn’t rule out any proposals to broaden the revenue base.